South Africa's Finance Minister Trevor Manuel said more jobs could be lost in the mining industry as a global economic downturn hurts demand for minerals, SAFM radio reported on Sunday.

South Africa's Chamber of Mines has said about 14,000 mining jobs are on the line, but analysts say more than 40,000, or 8 percent of the workers in a sector that employs close to half a million, could lose their jobs.

Manuel told businesspeople at a meeting in Springbok in Northern Cape -- the centre of diamond production in South Africa -- that mines could close down.

In a region like the Northern Cape, that is very dependent on mining, you are going see mines close down, you are going to see job losses. It is going to be very severe, he said on SAFM.

So we need to have in place proposals ... to try and deal with the ravages of the collapse and ensure that people remain in employment and that we can ... rehabilitate mining towns.

Mining is one of the biggest employers in South Africa, the world's top source of platinum and No. 2 gold producer, contributing more than 6 percent of its gross domestic product.

The government has set up a taskforce to try to minimise job losses, which could worsen the nation's unemployment rate of 23 percent.

The global economic downturn has hurt South Africa's economy, which is forecast to slow to 1.2 percent this year from an estimated 3.1 percent in 2008, after averaging 5 percent in the previous four years. (Reporting by Phumza Macanda, editing by Will Waterman)

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